How Did Yancoal Boost Production While Revenue Slipped in 1H 2025?
Yancoal Australia reported a 16% rise in coal production for the first half of 2025 despite a 15% revenue decline due to softer coal prices, while sustaining a robust cash balance and declaring a fully franked interim dividend.
- 16% increase in ROM coal production to 32.2 million tonnes
- 15% revenue decline to $2.68 billion amid lower coal prices
- Operating EBITDA of $595 million with a 23% margin
- Strong cash position of $1.8 billion and no interest-bearing debt
- Declared fully franked interim dividend of $82 million
Production Growth Despite Market Headwinds
Yancoal Australia Ltd has delivered a solid operational performance in the first half of 2025, with a 16% increase in run-of-mine (ROM) coal production to 32.2 million tonnes compared to the same period last year. Attributable saleable coal production also rose 11% to 18.9 million tonnes, reflecting improved output from its key mines including Moolarben and Mount Thorley Warkworth. This production growth comes despite ongoing challenges in the coal market, particularly subdued coal prices and temporary weather disruptions that delayed sales volumes.
Financial Results Reflect Price Pressures
Revenue declined by 15% to $2.68 billion, primarily due to lower realised coal prices, with the average realised price falling 15% to $149 per tonne. Operating EBITDA was $595 million, representing a 23% margin, down from previous periods but still underpinned by Yancoal’s competitive cost structure. The company’s cash operating costs decreased by 8% to $93 per tonne, supporting an implied cash operating margin of $40 per tonne. Profit after tax stood at $163 million, translating to earnings per share of 12 cents.
Strong Balance Sheet and Shareholder Returns
Yancoal ended the period with a robust cash balance of $1.8 billion and no interest-bearing loans, maintaining a net cash position that provides financial flexibility amid volatile market conditions. The company declared a fully franked interim dividend of $82 million, or 6.2 cents per share, reflecting a 50% payout ratio of first-half profits. This continues Yancoal’s track record of returning value to shareholders through dividends supported by strong franking credits.
Safety and Sustainability Commitments
Safety performance improved with the Total Recordable Injury Frequency Rate (TRIFR) falling to 6.32, remaining below the industry weighted average. Yancoal also highlighted progress on sustainability initiatives, including decarbonisation efforts and enhanced environmental monitoring, aligned with its P4 Change 4 Tomorrow strategy and upcoming reporting standards.
Outlook and Market Context
Looking ahead, Yancoal expects full-year attributable saleable coal production to be between 35 and 39 million tonnes, potentially at the upper end of guidance. Capital expenditure is forecast between $750 million and $900 million, focusing on fleet replacement and mine development to sustain low-cost, large-scale operations. While coal prices remain under pressure due to global economic factors and supply-demand imbalances, supply-side constraints and geopolitical events may support a price recovery. Yancoal’s strong operational base and financial position position it well to navigate these dynamics.
Bottom Line?
Yancoal’s ability to grow production and maintain financial strength amid price headwinds sets the stage for navigating an uncertain coal market in the second half of 2025.
Questions in the middle?
- How will Yancoal’s ongoing CEO recruitment impact strategic direction?
- Can coal price indices rebound sufficiently to improve margins in 2H 2025?
- What are the risks to production guidance from weather or operational disruptions?